>> they say some are much richer than others. some rich guys build human homes, this one is 20,000 feet. who needs that? >> you have an excessive home when some people are poor. in america we tend not to use the word needs about what other people are allowed to do with their money. rich man, poor man, that is our show today. >> john: america is on rich country and yet a amidst such wealth there is poverty. media tells me there is terrible poverty. more than 46 million people live in poverty last year. >> john: that sounds terrible but what does poverty mean in america today? >> i recently stopped by this food kitchen in harlem. people line up for free food.

most want government to do more. >> give us more jobs and more opportunities for those less fortunate. >> government should create jobs? >> create jobs. >> more food stamps? >> more food stamps and welfare. >> in america these days, poverty is not what you may think it is. >> i'm not exactly poor but i'm not exactly rich either. >> in today's america most poor people have cars, air-conditioners, cellphones and television. >> yet i have a tv. >> yes, i have a television. >> do you have an air conditioner? >> yes. >> cable tv? >> yes. >> how many channels? >> 101. >> game player and video player. do you have a cellphone? >> of course i do. you have to keep in touch with the family. >> john: a report found that today 99.6% of poor people have a refrigerator.

97% have a tv. 65% more than one, most have cable. most of cellphones and air-conditioning. i don't claim that tvs and air-conditions is what people need. some that were interviewed said they were homeless but the propaganda about poverty has led to a fast welfare state that hurts everyone. it encourages dependency. some say we create a nature of moochers. that is the titled of a new book by radio hot. moochers? >> i think it's time to get rid of euphemisms. the reality the old-fashioned word that some people have their hand out and they want something for nothing. one of the things i think we need to do is call things by their real name. >> john: so let's talk about the real numbers. poverty line at the moment is

$22,000 for a family of four. sounds quite low. hard to live that way. >> part of the problem, we don't count all the money that comes from the government. we don't -- exactly. >> medical care, food stamps doesn't count. >> right. so what you have done you have taken away, you have taken out of the consideration most of money they are getting from the rest of us. yes, it looks scary and bad, but the reality we have become a very generous society perhaps to a fault. thomas sole says it was better to resister to the haves and have lots. >> poor people have a lot of stuff. i'm not saying people with real need but one of the scary numbers, back in 1979 more than half of the payments went to the various poorest people. now it's about 36% which means that the safety net has become rather large mattress.

>> john: still it's the rich that gets the most in dollars i same all the corporate welfare, the handouts to cotton farmers get. they suction dies green entrepreneurs like solyndra. mike huckabee and i got free golf carts because there is a tricky tax credit. it expired now but to encourage people to use electric vehicles. i got flood insurance on my beach house which i shouldn't have gotten. isn't most of the money is going to more wealthy people? >> we have creating this culture across lines of class. this is how you create a culture of mooching. when everybody says everybody is getting a handout it becomes very difficult to say no to the next american pern that comes up. okay, john stossel getting goodies what about me? we bailed out on wall street and

general motors. and what we have seen the inability to say no. that is the key i think is that sucker principle. at what point that play by the rules, that save who don't dip in the public coffers, at what point do they see everybody getting it, if i don't get in a line i'm a sucker. that is where think we have the tipping point. when the makers in society begin to think they are the suckers because there are so many takers and we have encouraged it across the board. >> john: i'm encouraged at least the talk has changed. one thing is new in america, more recipients of corporate welfare or at least embarrassed. they know some people consider them as pigs. most corporate welfare queens will not agree to be interviewed by me. the about biggest recipient flew

me out to his headquarters so he could dismiss me. here is a look at dwayne andreas >> you are a pig feeding at welfare trough. doesn't bother you, not a bit. >> that is deal. i don't think a ceo would do that. >> in fact we have a lot of business executives who to go washington and frankly have decided i it's more important to grease the right palm to get the bailout or tax break. that is more important than creating equality product. you you saw that mentality. >> john: it's hard to work to create a better product and to spend $5 million to get a billion from the government? >> exactly. getting and sucking up a u.s. senator you can get billions of dollars. in this bailout period that

we've been in, we've seen companies be more successful by going and kurg favor than, can you remember young favor. >> in your book you call it i-piggybank. >> i paid for the bridge to nowhere. i paid for other people's stuff. i paid for all these things, you realize. >> to bailout for aig. >> i paid public employees for ex or but tenant salaries. i pay all of these taxes so my only function here, you are not celebrating my success, you are not celebrating my entrepreneurial spirit. you are saying, i turned knew a piggybank. how can i get more money from you? >> last point you said america

shouldn't don't do this? >> this assumption that we all need to be moochers, that basically says we are going to create this social welfare state that treats us as dependents, treats us as permanent children. >> john: that is too bad. thank you charles sykes, author of a nation of moochers. now i'm going to confronted a rich guy. he is building a house this big the is that fair?

>> corporations, they can pay good wages, no vacation, no sick pay. we can't afford it anymore. >> anti-capitalist protestors are furious that some of you have much more money than others. it's not the silly protestors. the poll found six in ten americans say government should reduce the gap between the wealthy and the less well off. cliff is one of those wealthy

people. he has gotten rich with an investment firm and he says is okay. why is it okay? you are moving money around and feeding off the public? >> you have a lot of issues. is it okay to make a lot of money and lot of money through an investment firm? investment firms we discover very rapidly when people do investing when people would do their jobs poorly. >> steven jobs created products but you shuffle money around? >> investment firms, speculators everyone gets accused of shuffling money around but we have been around since the roman empire. a lot of economy depends on prices being right. when we have seen the tech bubble and but people get prices far more accurate than if the

government is sitting there telling you what prices is to be. so banking and investment management serves a vital function. they get money to the right parts of the economy at the right price. >> john: if the company grows, but if he is wrong, he loses his money? >> that is the flip side. but it's just as important. one thing about capitalism, failure is every bit as important as success. >> john: a result of that that the protestors complain about is this income disparity. it is big in america. it is growing bigger, i would say it's a by-product of freedom. when you are free some people will do much better than others. if the stock market goes up, your class got filthy rich. >> some of the numbers are disputed. there are a lot of new studies out there. economists talks about something consumption equality. the stuff we actually buy with

our money. that is a lot more equal than it was 50 years ago. you go back 50 years the difference between middle-class person and rich person and stuff they bout bought with their money was a lot different an middle-class person and even bill gates. >> john: appointee poor people have access to cars, cellphones and flush toilets even kings didn't have years ago. given that there is disparity that feels unfair. >> americans have always been, i think this is a good deal, have been willing to accept even large amounts of inequality throngs three things are present. one, that those at the top didn't cheat. either you are crazy person or the vast majority have cheated to get their money. it's the exception not the rule when it happens. we should go after it.

number two is growth, those in inequality where it leads to more prosperity. over the last 30 years there is new evidence it led to more prosperity to everyone. history the book is closed on this. it does lead to more prosperity. last one is mobility. can someone who is can everyone have a shot of being that person who is well off? mobility has gone down. most statistics show it's hard to go down so it's harder to move out the bracket your parents were in. >> john: a pew study followed families 30 years, 68% of the kids born to the poorest fifth rose. 6% when went from the bottom to the top. the kids to the richest families 60% fell out of group and 9% went all the way to the bottom. >> it's rude when you come here

with more facts. to be frank most rich guys and women i know didn't start out there. a lot of them are middle-class, a lot of them were lower middle-class. i'm not the son of a rich father the secret is out. if you are very poor in this country you can get trapped into a cycle of poverty. i know you have discussed it before, but the marginal tax rate, to give up government benefits is not always a good deal in the system we set up. we are not awarded the attempt to get off dependence. >> john: on the morality of it. on "wall street journal" there is an article about your new home you are building, more than 20,000 square feet. that is gross. you have an excessive home when some people are poor. >> did the article i mention i

had 4 kids born within a year and a half. we don't use the word need. my marginal tax rate, depends what you count but somewhere north of 50. what i do what is left is really my business i have to tell america. i have a counter proposal for warren buffett, let's assume you have made some money and if you make $10, how does it get to the kids and social security tax, medicare tax, tax on investment kids and eventually the inheritance tax, i will sign on to the buff el rule because i'm in the 50s, if he will sign on for the government doesn't get more than 70% of what you make when you add it all up. i think more than 70%, taxes are necessary. we need taxes to run the country.

as someone on our side do is too extreme but taxes approaching 70% is theft. so if they wanted to spend money on what they want and people are spending 70, that is where the immorality is coming from. >> john: one point i wanted to quibble with, we need taxes to run the government. we run the country. free people run most of it. >> you are correct and not quibbling because i agree with you. >> john: thank you cliff. more on the evil disparity when we return. does your phone share what you are seeing and hearing right now with the touch of a button ? droid does. does it post it instantly to facebook with sound ? droid does.

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>>. >> john: my new book is how intuition leads us astray. my favorite example is

government run schools as i like to call them or public schools. they say america's public schools are one of the best parts of america. what i've learned the opposite is true. government schools are one of the worst parts of america. not just because the government monopoly doesn't educate well but the schools aren't even the melting pot that people think they are. today's government schools are more racially seg degree gated than private schools. people don't know that. one man who does know and also fights for education choice is patrick burn a ceo of overstock.com that sells cheap stuff over the internet. pa tragic, you call the school choice movement the civil rights issue of the 21th century. >> that's right. if people are worried about income and inequality and racial inequality. a lot of that gets driven by education inequality.

if you have some folks graduating with high school with a bucket full of human ka79 and folks graduating with a symbol, you have to address that. >> john: we get more social stratification under the government monopoly system you are assigned by a zip code. if you live in a rich neighborhood, odds are it's a better school. >> exactly. not only do voucher programs break that down in getting kids into more integrated schools. there is academic evidence papers published showing civic virtues of children that take advantage of that take advantage of that. >> john: meaning? >> more poll rant less racist. they measure it by how kids eat in cafeterias and they are more likely in private schools, more likely to eat lunch with each other across races.

>> john: you north sure, friedman foundation for education of choice, it was milton friedman that first introduced the idea of vouchers? >> in the last year or two, 13 states passed voucher programs in the last two years, some more happened today in arizona. couple weeks in louisiana and indiana, there is million kids eligible. >> louisiana now allows students statewide to get a voucher if they are enrolled in public schools graded "c", "d" or "f". so they are not vouchers for everybody. in indiana you get a voucher worth $4500 which is fraction of what the government schools are really spending but you can't be rich. it's better than what we've seen before. >> it covers up the bottom 55% of kids, the income cap. >> $61,000 for a family of four. >> that coverings about 55% of

the families. it's a started. at the end of the day. milton used to say a voucher program for a poor will be a poor voucher program. >> john: it should be for everybody? >> everybody should have this choice. we'll certainly take it as start. we think that within a few years they'll be a enough data there will be a great demonstration of fact and we'll see it spread. >> john: so we all get vouchers and schools compete and all get better, but there is really rich schools where rich people go and add their voucher to the extra tuition. there will be some inequity. i look at chile that has better schools but people riot because it was inequality a separation between rich people and poor people. all these young people hate that.

>> there are irrational preferences in the world. >> i agree they are irrational but the population of chile was way up, his popularity but then they say they are run by communists. >> they are preflgtd it. >> they get confused. people in chile and rioting over some unrational set of beliefs. they introduced school choice and developed the best educational system. >> john: and they haven't gotten rid of it. as ceo of overstock you are a rich guy but you could argue you have helped the poor. >> we tried. we have saved people five to ten billion over the course of the history. it's a nice step. >> john: thank you patrick burn. coming up the inequality that people should be angry about, people like me steal from little kids.

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are just as important as the places they'll go. amway conveys quality. to learn more, contact an amway independent business owner. >>. >> john: so i say the fact there are rich and poor people in america shouldn't be a problem. we're a free society. yes the rich sometimes will get richer but so do most of poor and that is good. but there is an injustice we

should talk about. every year government takes billions from poor people and gives it to richer ones. i'm talking about america's biggest government programs social security and medicare. now, i know that is head spinner people love those programs, liberals like professor mark lamont hill says thank goodness for social security. they allow the elderly poor a decent life. but the author of red, blue and broke says liberals miss the big picture. what do you mean? >> it's getting bigger all the time, it's the debt picture. young people are struggling to find part-time jobs but they are paying for the social security and medicare benefits of current retirees and will be doing so. >> john: they are retirees. that is what the young people supposed to do. >> you have people paying today for the benefit of people who

have had a better standard of living and wealthier than they are. there is inequity. >> john: when you say they are wealthy yes, sir, people 65 and older have a net worth of $170,000. 35 and under less than $4,000. >> it's worse than that. not only are the young people paying for the current and future recipients of social security and medicare, but in addition to that they have been burdened with the hidden debt, unfunded liabilities besides social security. >> let mark responded to the basic social security argument. >> you make a really good argument for fixing social security and medicaid. there is no disagreement. but there is a fundamental premise here that i believe in that the younger take care of the elderly. people who are 65 and older have greater wealth. they have paid off their homes. they pay their mortgages.

that data is bit misleaked. ultimately we are supposed to take care of the elderly and i am fine with that. >> john: but the numbers don't work anymore. how do you want to fix it? >> tax the rich. >> john: tax the rich? >> but you can't tax them enough to in the unfunded liabilities. >> taxation isn't the only way to go. >> john: we are in agreement. if you took all the rich people's money it wouldn't be enough. >> i wouldn't propose that. but if we raise the social security age. >> let's raise the retirement age, they get yelled at? >> it's the most popular thing to do but ultimately, i think we agree you can't just tax. you have to do something else. >> john: raise the retirement age, solves it? >> it doesn't solve it it prolongs the problem.

all these things are a form of debt repudiation by the government. it's the government saying we made you a promise or we treated as a promise. you believed it was a promise. it was not a promise, it was not good. it was not sound. >> john: i guess this might. it was previous politicians that did that. >> are you actually saying social security as an idea is fundamentally wrong? >> sure. >> explain why it's wrong? >> in the words of margaret thatcher, problem were socialism you run out of other people's money. that is the answer. >> john: look at this graph how many workers there are per social security recipient. it made great sense in 1945 and even 1950 when there were 40r 16 workers for retiree. now it's gone down to two and a half. >> part of that shows fundamentally as an idea, you are saying it's flawed based on

the worker per recipient ratio zbleechbh what is the difference? >> you don't see a social security as an idea you are saying we need to repair how it functions. >> how do you restore american prosperity? do you keep going on with the myths and inflate your way out of a problem like social security or do you face them and say we lied to you, the state lied to you, it was unsound. it was a ponzi scheme. let's deal with this. >> john: we shouldn't have the social security programs because it changes attitudes about saving for yourself? >> that is the best point. it does change the fundamental character of the people that somebody else will take care of the retirement benefits, healthcare benefits. so instead of being a nation of savers, creating pools of capital that make us all richer. we spend like crazy. in the meantime, the chinese are saving at a world class inrecords of saving. >> john: chinese don't assume

that mom or government will take care of them? >> they know better. >> most american people don't believe they need to work hard or save becauseat the end of their working age the government will come in and save to them. you are making a huge leap because americans don't save enough they are not saving enough because they have expectation of social security. that is huge psychological jump. >> it doesn't matter. >> it doesn't matter why, it does matter why because you are saying they are not doing it... there is no evidence of that. no, it's not logical. >> they don't save because they don't have any money. >> they haven't invested their money. their money has again, you gave the money to your uncle and he went out and spent it. you come to me, my retirement account says i have this and other but the money has been spent and gone. >> so you are complaining that

the united states is no good uncle? >> actually, yes you contributed all your life and it's not there. >> john: they said it was an insurance plan and they spent it. >> that is the wrong way to think about it. i think we have provided a safety net for the vulnerable and elderly. i'm the one paying this. i should be the one ticked off and not you guys and i'm totally fine because i under the value it offers our society. without that value, you can say hypothetically if people for the last 65 years did something different but the reality right now we have people in 60s, 70s and 80s we have to to support. if we don't something is going to happen. >> you have 3.6 million people a year entering the age of 65. leading edge of the babyboomers, becoming fully eligible for medicare and social security benefits and the money is not there. >> john: i'm a baby boomer.

there is too many of us. >> you'll be fine, sir. >> john: so you should be mad a at me. here is a live picture of the effects of social security and medicare. >> excuse me. i have to take some of these. no, i'm the old person, i need this. no, i won't give it back. i need this. >> john: that is basically what we're doing. >> young giving to the old? >> this is about, this is generational of socialism i'm thinking about as supporting people who need support. as a nation we have to do that. >> john: it's cruel not to do this. you just want to dump the old people? >> i wish us all back to american prosperity but we entered the new normal. >> john: what about the people now you rely on. >> you confronted the situation and families are going to have to adjust and people will have

to adjust, coming is going to have to adjust. there are federal assets that can be sold and begin to make people whole. >> put my 85-year-old father. >> put him in your living room? >> he is already in my living room. you want him working at walmart. [ laughter ] >> john: coming up, whole numbers that surprised me. apparently americans really are ready to make serious cuts in the budget. the budget. that is next. [ male announcer ] this is genco services -- mcallen, texas. in here, heavy rental equipment in the middle of nowhere, is always headed somewhere. to give it a sense of direction, at&t created a mobile asset solution to protect and track everything. so every piece of equipment nows where it is, how it's doing or where it goes next. ♪ this is the bell on the cat. [ male announcer ] it's a network of possibilities -- helping you do what you do... even better. ♪

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i resent the fact they think we are talking about we are angry. >> john: well, yea think they are selling envy. highlighting the gap between rich and poor, saying government must stop the rich from getting away with stuff wins the votes.

people call it class warfare, but pollster scott rasmussen says i am wrong. that class warfare doesn't really work? >> certainly if you say somebody is getting away with something, people tonight like that. that works. if you can convince people getting away with something that is really powerful. the reason calling for higher taxes on wealthy works today is because most people think higher income people pay a smaller share on their taxes than anybody else. people don't want to soak the rich but they want to make sure that everybody pays the same. >> john: most people rich people pay more in taxes actually pay less. >> right. part of sit skepticism about anything to do with government. part simplify it if you are rich enough you can hire a good accountant to get you special benefits. some of that is true, but in numbers, it's a lie.

two out of three people believe middle-class pay more in taxes, a large number of people that make less than them are paying less than their fair share. >> john: fair share? >> more than 30% for anybody in america to pay to all governments, federal, state and local. >> john: i would love it if i paid 30%? >> of course. people don't have any sense how high taxes are. >> john: republican talking point is 53% of americans don't pay federal income tax? >> this is class warfare of a different type. it really doesn't make any more sense. they are paying sales taxes and state taxes and other taxes. what is really interesting, they are more opposed to tax hikes than upper income americans. >> john: really? >> it makes sense because if you

are lower end every dollar matters so you can't afford to shell out that extra money. middle income and lower middle income americans are the core of the anti-tax movement in america. >> john: but you say republicans are defeatful when they talk about income tax because payroll tax and other stuff. by the way it used to payroll taxes have been growing and huge portion of everybody's leifr. another data from you that surprised me, only 16% think that today's children will be better off than their parents. >> we have reached a point where it used to people, there is a business cycle and bad economic times. now, they are concerned that something fundamentally gone wrong and they are not sure america can get out of it. >> another poll that surprised me, people think their own congressman is on the take and will sell votes important cash? >> sure, they think that goes

on. most people believe that the politician will hurt them if they don't. its legalize distortion racket and they think their own representative plays in that. one out of four people think their congressman is begs person for the job. >> john: he is probably not the best person for the job? >> most cases, probably true. >> you say a proposal to combine it in a single item and stop the growth will be popular. i can't believe that. every time i talk about cuts people scream at me. when i have seen poll data on cutting any medicaid social security? >> social security is not a means tested. medicaid is means tested. 71% believe it's too easy to collect the welfare programs. what they would like to trim the standards so the people at the top end aren't able to receive

the benefits but those who are low lower down get their benefits. when you talk about other proposals like social security, people are open to ideas but they are not open to cutting benefits for their grandparents. they want to make sure the kids have a decent deal. >> john: or they have a decent deal. >> because there is no money to pay it. if they can make the tradeoff choices, if you want to retirement later and pay less in taxes now, you should that have right. >> john: one piece of data i thought was good news, most people think that anybody that wants to work can work his way out of poverty? >> that's right. i think it's good news that people have that sense that working hard is the key to getting yourself into a better financial position. >> john: you say the public is ahead of the politicians on this? >> absolutely. the american people are ahead of the politicians on almost everything and they have been through every major change in american life. when you start talking about the changes, if you begin talking

about, we have a budget crisis we have to slash and burn and hurt people, you never get support like that. if you can present a different picture how social work, there is popular supported for that. >> the budget crisis has gotten to people. spend less if it means. >> until we get our house in order. >> john: people want to spend less? >> they want to spend less. >> john: i hope that is true. >> it will come. >> john: up next, my take on rich versus poor. it has a very nice spice note. [ jim koch ] it has a little lemon zest and a historic brewing spice called grains of paradise. -it's citrusy. -lemony. sam adams summer ale, it totally reminds you of summer, you know? have you ever partaken in a car insurance taste test before? by taste? yes, never heard of it.

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we can see your greedy. hey -- >> those union protestors see

the greedy side. they are upset that the rich get richer and poor get poorer, except that is not through. the rich do get richer, especially when markets go up, that is true but the poor got richer, too. not every year. but the poorest fifth of americans are now 20% richer than when i was in college and that is adjusted for inflation. and it doesn't even include the improvements in life we talked about earlier. the fact that even poor people now have access to medicines, phones and things that kings didn't used to have. in free societies, rich get richer and the poor get richer, too. that won't convince the protestors or even most americans when polls say they wanted government to reduce the wealth gap. that is why these women often wear robin hood caps. government should take from the rich. i used to think that was key to helping poor people, but once i

wised up and saw economic freedom is crucial to both of prosperity and dignity of the individual. i concluded that government can't but individuals succeed, my life here in new york changed. i stopped winning emmy awards, my media colleagues didn't like me anymore. some people, are you john stossel, they would say i hope you die soon. so why is he so angry? i thought he thought he considered me as conservative and where i live, it's being like a child molester. but i'm a libertarian. i think homosexuality is just fine. that drugs and fine and prostitution should be legal. that adults should be free to do anything that is peaceful. i'm a libertarian. i thought the liberals would like me because of that. it's they who are most angry at me. why?

come to think it's because a consumer reporter that now defends free markets and they hate markets. they hate capitalism and they hate the phrase let it be free. they hate the vast result that freedom allows. i understand their anger that some americans are so rich, it feels wrong and unfair, but when government tries to fix that, what does it do? president obama talks about making millionaires pay their fair share, but once you include all the taxes rich people pay, government already takes more than half of rich people's money. even if obama took hundred percent of the money, that would be less an fifth of what he ants to spend. wouldn't even cover half of our deficit. our debt would still go up. then, of course, you could tax rich people at hundred percent you wouldn't get the money because most would stop working.

some countries have reduced income inequality. cuba and north korea they reduced gap by making everyone poor. that is not true. the political elites in those countries have much more than the average person. so how about europe? they eliminated the wealth gap with social democracy. it sounds nice but it means lots of rules and higher taxes pretty much of what we're doing there. it did eliminate the wealth gap but it did it by keeping everyone a little poorer. facebook was not invented in europe for a reason. it happened here for the same reason microsoft, google, amazon home depot happened here because we still have some economic freedom. that is good because if we're somewhat free, if the bureaucrats don't totally

strangle us. americans will inconvenient things and as a result some people will be much rich than others and so what? the world will be richer and most everyone will be better off. that is our show. we'll have another new toss el show next thursday night at 9:00 p.m. on the fox business network. thanks for watching. does your phone share what you are seeing and hearing right now with the touch of a button ?

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can republicans tap into voters economic anxiety without attacking the president personally? we'll ask karl rove. plus, catholics in court. a look at the legal and political ramifications of this week's obama care lawsuits. and the facebook fiasco. who is to blame for the botched ipo? welcome to the journal